Report: Ship Scrapping Growth Could be Good News

Wednesday, September 07, 2011
Braemar Seascope Research Manager Mark Williams

Braemar Seascope’s demolition brokers are working extra hard this year, which may be good news
for everyone. Dry cargo demand growth is running at strong levels due to the twin processes of industrialization and urbanization in emerging markets. Annual average demand growth between 2011 and 2015 is likely to match and may even exceed the annual 5.2% growth witnessed between 2004 and 2008 – the years of the superboom in dry cargo vessel earnings. However, the massive amount of vessel ordering during and after the boom has led to the currently epressed freight market for dry bulk carriers. Bulker fleet gross growth (i.e. counting new deliveries but not scrapping) is likely to be in the order of 12% a year until 2013 as we add more than 3,000 newbuildings to the circa 8,100 ships that existed at the end of 2010. But scrapping can make a difference in these markets. In order to bring net fleet growth (i.e. deliveries minus deletions) into line with demand growth expectations, every bulk carrier built before 1985 ‐ nearly 1,500 ships – would have to be scrapped by the end of 2013. This would bring fleet growth down to an average 6.3% a year.
In other words, to return supply and demand growth to balance, the industry must scrap 12 bulk
carriers every week for the next two years and four months without ordering any further bulkers
for delivery before 2014.
The good news is that demolition at these levels is less outlandish than it may seem. According to the Braemar Seascope Demometer, 409 bulk carriers totalling almost 20 million dwt were sold for demolition in 2011 up to the end of August, at a rate of over 11 a week. This amount of scrapping far exceeds previous records of 11.8m dwt in 1999 and 11.2m dwt in 2009. If scrapping continues at this rate for the balance of 2011, some 29m or 30m dwt will be removed from the bulk carrier fleet, offsetting the 85m dwt Braemar Seascope expects to be delivered in 2011.
Braemar Seascope Research Manager Mark Williams, says: “There’s a good chance that bulk carrier
fleet growth can be kept down to 9% this year if these levels of scrapping keep up. We just have to hope that the global economy pulls out of the doldrums and that demand keeps up with
expectations.”

Maritime Reporter August 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Bulk Carrier Trends

G E Shipping Takes Delivery of Bulker

The Great Eastern Shipping Company Ltd. (G E Shipping) took delivery of a new building Kamsarmax Dry Bulk Carrier “Jag Aakash” (81,600 dwt). The vessel was ordered

Goldenport Bleeds in Red

Goldenport Holdings Inc reported a net loss of USD14.7 million in the first six months of 2015, significantly wider than the USD1.4 million net loss a year earlier

Strong Returns for Sovcomflot

Russia’s biggest shipping company PAO Sovcomflot (SCF Group) surpassed its own expectations and went forward on both revenue and net profit in the first six months.

Finance

Traders Scramble for Caribbean Crude Storage

Demand for crude storage in the Caribbean, one of the world's most important oil hubs, is rising as producers and traders try to ride out the worst price crash

Liam Means Business for Shipping Cluster

Enterprising student Liam Finch has been putting his summer days to good use by working on an important survey for the Isle of Man Shipping Association (IOMSA).

Nominations Invited for BIMCO Awards

BIMCO, the world’s largest international shipping association is now calling for nominations for its prestigious awards, to be presented in Hamburg in November 2015.

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Navigation Pod Propulsion Port Authority Salvage Ship Electronics Ship Repair Ship Simulators Sonar
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1367 sec (7 req/sec)